The logo of ABB is seen at an office building in Zurich, Switzerland September 10, 2020. REUTERS/Arnd Wiegmann
ZURICH (Reuters) -Swiss engineering company ABB said it is seeing strong customer demand, particularly from a surge in new data centres being built in the U.S. to process artificial intelligence.
ABB, which makes factory robots, as well as motors and drives for factory production lines, also said on Thursday it was seeing little impact on customers from U.S. import tariffs as it reported its third quarter results.
The results give an insight into the health of the broader industrial economy, with ABB's products used to electrify and control buildings, mines and factories.
New orders in the U.S. jumped 27% during the third quarter.
"It's not related to tariffs," said Chief Executive Morten Wierod. "It's the normal standard business where there is strong demand."
GROWING DEMAND FOR DATA CENTRES, UNINTERRUPTED POWER
ABB generates around 7% of group revenues from data centres, up from 6% a year ago. It provides electrification products, for example uninterruptable power supplies, to keep server rooms online.
"The build-out of data centres, of course, is one key driver, but it's also the electrification trends of industries that also puts more pressure on the utility side, so they need to invest, and even in power generation," Wierod told reporters.
Data centre-related orders increased by a double digit percentage rate in the third quarter. Earlier this week ABB announced a partnership with chip maker Nvidia to develop the next generation of data centres.
ABB said its operating earnings before interest, tax and amortisation (EBITA) rose 12% to $1.74 billion, slightly above analysts forecasts.
Revenue rose 11% to $9.08 billion, beating forecasts for $8.88 billion, while orders rose 12%. Its shares rose 2.5% in early trading before paring gains later in the morning.
Chief Financial Officer Timo Ihamuotila, who is stepping down next year, said the impact of U.S. import tariffs had been limited to the tens of millions of dollars on operating profit, which ABB was countering with small price increases and efficiency gains.
The company currently produces locally around 75-80% of the products it sells in the U.S. and is aiming to reach 90% by investing more in U.S. factories.
(Reporting by John RevillEditing by Jane Merriman and Elaine Hardcastle)
